Alexa is in Millions of Homes and Amazon is Losing Billions

The Journal.

The Wall Street Journal

Daily News, Business News, News

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🗓️ 31 July 2024

⏱️ 18 minutes

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Summary

After ten years of sales, 500 million Amazon smart devices have found their way into homes around the world. But the company is losing billions of dollars on the devices. WSJ’s Dana Mattioli discovered an accounting tool that’s kept the huge losses under wraps. Further Reading: -Alexa Is in Millions of Households—and Amazon Is Losing Billions Further Listening: -Amazon's Secret Operation to Gather Intel on Rivals -What Is Amazon's Secret 'Project Nessie'? Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Around the world there are over 500 million devices enabled with Amazon's voice assistant Alexa.
0:13.4	Have you ever used an Alexa?
0:16.7	Yeah, for setting timers when cooking
0:20.0	to ask it the weather or the time and then to play music sometimes.
0:25.0	Actually, much to my chagrin, one of my son's first words was Alexa to talk to the speakers.
0:32.0	No way. Yeah, I think he was... was Alexa to talk to the speakers.
0:33.2	No way.
0:34.2	That's my colleague Dana Matioli who covers Amazon.
0:38.9	And Dana has been looking into the business of Alexa, the digital voice installed on Amazon smart speakers.
0:47.0	Okay, how much money do these products make?
0:51.0	None. Zero. Zero. They actually lose a lot of money for Amazon. How much is a lot?
0:57.1	So I was able to learn between 2017 and 2021 Amazon's devices team,
1:04.9	which makes more than just these echo speakers
1:06.7	and Alexa lost more than 25 billion dollars.
1:10.8	Billion.
1:15.0	25 billion with a B. How is that possible?
1:16.0	Yeah, it's an enormous loss.
1:18.0	And the idea was just get him in the homes and we'll figure out how to monetize them later.
1:22.0	We'll worry about profits later.
1:24.7	But now, these massive losses
1:27.6	are a problem Amazon is trying to fix. Welcome to the journal,
1:35.0	our show about money, business and power.
	...

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